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Until relatively recently, populist autocracy seemed to be advancing relentlessly across Latin America, backed by Venezuelan petrodollars and guided by the Castro brothers. It was definitely expanding into Bolivia, Ecuador, and Nicaragua; it was threatening to infect other countries in Central and South America; and it was treated with pragmatic respect, if not sympathy, in the Caribbean.

Today, Venezuelan leader Hugo Chávez is still trying to acquire more satellites for his “Bolivarian revolution,” and he is still working to maintain close relationships with his existing client states. But from a geopolitical perspective, it is clear that last year’s crisis and triumph of democracy in Honduras marked a turning point. Since then, Chavismo has lost its expansive drive, and the strategic tide is now running against it. The recent election results in Colombia; the remarkable economic, political, and social progress of Peru, which had been on the verge of falling under the influence of Venezuelan-style populism; the new conservative governments in Panama and Chile; Felipe Calderón’s handling of a complex political situation in Mexico; and the increasingly blatant authoritarian excesses of Venezuela and its satellites—all of this has created an adverse environment for Chávez and his cohorts.

It is hard to ignore certain similarities between Venezuela’s travails and the outcome of the Cold War. Even though it benefited from immense natural resources, the Soviet Union ended up in ruin. Venezuela is currently going through its own process of economic implosion: It has experienced rampant inflation, a sharp and sustained drop in GDP, a collapse of foreign investment, and painful scarcities of basic products and services, despite the fact that global oil prices remain relatively high (in historical terms).

More by Jaime Daremblum

None of this means that the threat of Chavismo has been permanently vanquished. As Chávez becomes more and more unpopular at home, he will find it more and more difficult to win fair elections, and will thus resort to all kinds of autocratic schemes to perpetuate himself in power. Hence the ongoing Cubanization of Venezuela: Havana has dispatched senior officials, both military and civilian, to help Chávez consolidate his dictatorship. Indeed, Cuban cadres now effectively control the Venezuelan armed forces. Chávez has long hoped to turn his country into a new Cuba. His Castroite advisers are showing him the way.

Latin America’s functional democracies now face a dilemma: Either they abandon Venezuelans and betray their democratic convictions in exchange for economic benefits (such as a secure oil supply), or they remain faithful to those convictions and demand respect for democracy in Venezuela. The latter course involves some risk. Chávez has been known to lash out at governments that criticize his policies. In 2007, for example, Chávez threatened to close a Venezuelan-owned aluminum plant in Costa Rica after then–President Oscar Arias suggested that he was a “dictator.” A year later, when Colombia accused Venezuela of aiding narco-terrorists belonging to the FARC, Chávez mobilized his military and made bellicose statements about the possibility of war.

How Latin America and the United States respond to the deteriorating situation in Venezuela will go a long way toward determining how they respond to authoritarian abuses elsewhere in the hemisphere—particularly in Bolivia, Ecuador, and Nicaragua. Although those three countries have been radicalized at varying speeds, Presidents Evo Morales, Rafael Correa, and Daniel Ortega have all trampled democratic checks and balances, sought to lift presidential term limits, persecuted political opponents, and harassed private companies with expropriation, confiscation, and ruinous price controls.

Thankfully, however, the black spots on Latin America’s democratic record no longer pose a significant extra-territorial threat. The values and principles of democratic government have become entrenched throughout the hemisphere. Indeed, constitutional democracy, rooted in fundamental rights, is emerging as the present or future destination of an overwhelming majority of Latin American countries.

In short, Chávez is losing the ideological war. Whether or not future historians point to the 2009 Honduran crisis as a watershed moment for Bolivarian socialism, it is clear that the survival of democracy in Tegucigalpa represented a sharp blow to Venezuela’s regional ambitions. Had Manuel Zelaya executed his power grab successfully, other radical populists might have been emboldened to try something similar. Instead, Zelaya’s spectacular failure will serve as a key deterrent against Chávez-style political maneuvers.

Jaime Daremblum, who served as Costa Rica’s ambassador to the United States from 1998 to 2004, is director of the Center for Latin American Studies at the Hudson Institute.